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February 14, 2018

4 min read

Real Estate Valuation: Cap Rate and Return on Cost Decoded

While they both provide valuable insights, their application...

Capitalization Rate, or Cap Rate, is a fundamental concept in real estate investing. It's used to estimate the potential return on an investment, helping investors compare different properties before making a decision.

Cap Rate is calculated by dividing the Net Operating Income (NOI) by the property's current market value. Here's the formula:

Cap Rate = NOI / Current Market Value

Net Operating Income is the annual income generated by the property after deducting all operating expenses (but not loan repayments or capital expenditures). The Cap Rate, expressed as a percentage, gives a rough estimate of the return you might expect if you were to purchase the property outright, without a loan.

The Cap Rate can help assess risk and return: a higher Cap Rate could signal a higher potential return, but also a higher risk, while a lower Cap Rate might indicate a lower return and a less risky investment.

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August 3, 2021

5 min read

Creating a Diversified Portfolio: Success Strategies

When it comes to investing, the notion of diversification is nothing new...

When it comes to investing, the notion of diversification is nothing new. Most investors know the wisdom behind not putting all their eggs in one basket. Yet, when it comes to real estate, this diversification often falls by the wayside. Many investors branch out into real estate, invest in a single asset, and believe they've achieved diversification. However, this approach misses the wealth of opportunity that real estate investment truly offers. Today, we'll discuss diversifying private equity real estate investments and why it's essential to your portfolio's overall success.

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